Official Development Assistance (ODA)
7. Growing Asian Economies and Japan's ODA

(1) Economic Growth in Asia and the Role of Japan's ODA

Asian economies are growing dramatically, attracting keen worldwide interests. During the 12-year period from 1980 to 1992, per-capita GNP increased at an annual rate of 8.5% in South Korea, 6.0% in Thailand, 4.0% in Indonesia, and 7.6% in China.

Obviously, the efforts on the part of the developing countries played decisive roles in propelling their economies. In addition, it should be noted that Japan's ODA played an important complementary role in helping them achieve economic growth. Historically, Japan provided the bulk of its ODA funds for Asian countries, and these aid funds have contributed to building economic infrastructure -- such as transportation, communications, and energy -- and human resources, both of which are essential to support economic growth in these countries.

According to a report (Note), the ODA extended by Japan during the past 20 years has added to the GDP growth rates of Southeast Asian countries certain percentage points (1.8% in Malaysia, 5.4% in Thailand, and 2.8% in Indonesia) over and above the growth rates these countries would have achieved during these years without Japan's ODA.

(2) Challenges for Asian Countries and the Roles of ODA

(a) Support to Private Sector Initiatives in Infrastructure Development
Public funds (such as those provided by ODA) often prove inadequate to meet the huge financial requirements for infrastructure projects which are vital for furthering economic growth in Asian countries. Private funds are necessary to fill the financial gap. There have been discussions within the Government of Japan in various fora to find measures to facilitate private sector initiatives in infrastructure development. Currently, efforts are focused on formulating concrete support measures by sending survey missions to Asian countries.

(b) Measures for Remedying Problems Created by Economic Growth
Asian countries are facing various problems, including a widening income disparity and environmental problems, which arise in the course of economic growth. And there is a growing tendency among these countries to seek to achieve more balanced development in line with the idea of people-centered development. The Japanese Government attaches importance to this tendency and has been supporting the efforts these Asian countries are making in the social sector and the environment.

(c) Development of Indochina
Following the cessation of civil wars, expectations for a speedy reconstruction of their war-torn economies are running high in Indochinese countries. It is important for them to take a regional approach transcending national borders. Japan has been actively involved in promoting their efforts by holding Ministerial Forum for the Comprehensive Development of Indochina in 1995 and by commissioning a group of experts to draw up a development scenario.

A report by the International Development Center, commissioned by the Ministry of Foreign Affairs, shows the impacts of Japan's ODA on Thailand, Indonesia, and Malaysia based on econometric assessments.